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Tesla’s Costly Repairs Could Inflate Insurance Rates

National insurer AAA is claiming two of Tesla’s new vehicles are so costly to repair that it needs to raise its rates. The cars identified as the Model X and Model S, require parts so rare that insurance rates may have to go up by a whopping 30%. So far, Tesla has disputed the claims, saying the car is simply not classified correctly.

The Model X and S are listed as large luxury vehicles with high safety ratings. This falls under the same umbrella as cars such as the Audi A6 and BMW 5, which both boast low claim rates. The Model S on the other hand, is involved in nearly fifty percent more claims than the rest of the automobiles labeled as large luxury vehicles. It’s not just the frequency of the claims that concern companies like AAA, it is the severity of the damage as well.

Tesla executives say the problem lies within the classification. They claim the Model S and X really have no equals on the automotive market, making it wrong to compare to any other vehicles. If the models were listed in the right class, or perhaps a class of their own, the crash data would seem much less alarming.

The American car company, Tesla was founded in the early-2000’s by a group including Elon Musk. The California-based organization quickly rose to fame with its creation of the first electric sports car back in 2008. The now $7 billion industry continues to generate buzz for is innovation in the automotive industry, including the Model S vehicle, which ranks as the second-best selling plug-in car of all time. And just four months ago, Tesla was named the top American car brand.

As of right now, it appears that AAA is ready to raise rates due to Tesla’s expensive repairs. Other insurers such as Geico and State Farm refused to commit to raising rates at this time. It remains to be seen if AAA or Tesla will win this war of words.